President Trump bans importation of certain power equipment

Washington, DC – President Trump has issued an executive order on May 1 banning the “acquisition, importation, transfer, or installation” of transmission and electric generating equipment designed, manufactured or supplied by any company that is “subject to the jurisdiction” of a country the US considers a “foreign adversary,” Norton Rose Fulbright reported.

The Trump administration has been trying to protect coal and nuclear power plants after arguing that they are needed for system reliability. The president has spoken at rallies about how skittish television service would be if people had to rely on intermittent renewable energy like wind power. 

US intelligence agencies have warned in the past that the US electric system is vulnerable to attack. The executive order says that “foreign adversaries are increasingly creating and exploiting vulnerabilities” in it, including through cyber activities. 

The government is concerned about the threat posed by using equipment supplied by foreign adversaries. 

The order imposes a broadly worded ban, but it should be interpreted in light of the aim to safeguard the part of the US electricity supply that moves through the bulk power system.

It says the following actions are prohibited:

any acquisition, importation, transfer, or installation of any bulk-power system electric equipment (transaction) by any person, or with respect to any property, subject to the jurisdiction of the United States, where the transaction involves any property in which any foreign country or a national thereof has any interest (including through an interest in a contract for the provision of the equipment), where the transaction was initiated after the date of this order.

However, actions are prohibited only where the US Department of Energy decides a transaction poses one of three risks described earlier, including to US national security.

The order applies not only to projects in the United States, but apparently also to projects outside the United States undertaken by US persons. It applies to a transaction “by any person . . . subject to the jurisdiction of the United States.”

The Department of Energy can propose measures that would mitigate the national security concerns in order to let a transaction move forward. 

Sales of projects into tax equity vehicles are potentially affected to the extent the order covers renewable energy. The order bans any “transfer . . . of any [proscribed] bulk-power system electric equipment (transaction).” Read literally, it applies to purchases of development rights to projects where a foreign adversary company has signed a contract to supply equipment.

The Department of Energy may publish a list of pre-approved equipment or vendors.

It is also supposed to identify equipment that is potentially a problem “as soon as practicable” and make recommendations for how to “identify, isolate, monitor, or replace” such equipment in the US power system. This creates risk that the government might require replacing any equipment in the future that it identifies as a potential threat.

The order also directs the Department of Energy to set up an inter-agency task force that will report within a year on model procurement policies for federal agencies to follow in the broader US energy sector to address national security concerns. The task force will also focus, among other things, on the potential for attacks on the electricity supply to originate through the distribution system and will engage distribution system industry groups in that effort.

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